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The Delaware Supreme Court, in two recent decisions, has clarified the application of the corporate-opportunity doctrine

Article Abstract:

The Delaware Supreme Court clarified the corporate opportunity doctrine in Broz v. Cellular Information Systems and Thorpe v. CERBCO, Inc. In Broz, the court ruled that the determination that a breach of the doctrine has occurred depended on factors including the corporation's ability to use the opportunity and intent to do so and that such a determination was fact-intensive. In Thorpe, the court ruled that the fiduciaries' action caused the company no injury because, as controlling shareholders, the fiduciaries in this case could veto any transaction of the company which whould have led to the sale of all or substantially all of its assets.

Corporate governance, Delaware

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Warning: rescue may raise risks; after 'Alantec,' investors must beware that the company they save may not be their own

Article Abstract:

The settlement of the case of Alantec Corp, a computer networking equipment firm,, dealt with a set of venture-capital financings which resulted in a dilution of the founders' interests. It was believed the founders had too much stock in view of the decrease in their role with the company and had essentially given away common stock to the new management so they could vote those shares for the new financings. Corporate counsel should recommend a disinterested third party be the lead investor to avoid such conflict-of-interest situations.

Computer network equipment industry, Network hardware industry, Mergers, acquisitions and divestments, Venture capital

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A recent case limits an officer's exposure in selling securities before a corporation revises its earnings projection downward

Article Abstract:

A US district court in TX ruled recently that a corporation's plan to change its earnings projection is not per se material, and that only one standard of materiality applies to both insider-trading cases and fraudulent failure to disclose. Judge Lee Rosenthal in SEC v Hoover found that Howard Hoover, general counsel of Browning Ferris, properly relied on the judgment of an in-house securities counsel in deciding that a plan to lower earnings projections from 10% to 10-12% did not bar him from selling stock.

Disclosure (Securities law), Insider trading in securities, Insider trading (Securities)

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